In the 21 years Simpson has run the investment portfolio at Geico, a wholly owned subsidiary of Buffett’s Berkshire Hathaway, his performance has mostly trailed the master’s. Still, Buffett’s heir apparent hasn’t lagged by that much; he even beat Buffett in 1999. His style bears watching for anyone who wants to know what value investing is all about.

Sure, value isn’t the flavor of the moment on Wall Street. Buffett, with his eye on the long term, knows its day will return and shrugs off the latest trends. And he definitely seemed to be focusing on the long term when he penned the following in Berkshire’s 1995 annual report: “Lou takes the same conservative, concentrated approach to investments that we do…. His presence on the scene assures us that Berkshire would have an extraordinary professional immediately available to handle its investments if something were to happen to [Vice Chairman Charles Munger] and me.”

This apparent anointment touched off an uproar in finance circles that since has died down because Buffett and Simpson have kept mum on the subject. Neither would talk to us for this story. A more persistent sign that Simpson is the favored one: Of all the investment managers in Berkshire’s numerous subsidiaries, only he has a free hand running a portfolio. Geico’s now tops $2 billion; Berkshire’s is approaching $40 billion.

Lately, though, the question of succession at Berkshire is even more acute. Buffett just turned 70 and underwent surgery this past summer to remove several benign polyps from his colon. Sidekick Munger is 76. Simpson, at 63, probably won’t guide Berkshire for as long as Buffett has, yet he certainly would put his stamp on the parent company.

Is Simpson as good as the more famous value investor? Almost. From Simpson’s debut in late 1979 into 1996, when Geico last traded publicly, Simpson averaged a 22.8% return to Buffett’s 26.5% –and both blew away the S&P, which posted 15.7%. Since then Geico has been a wholly owned subsidiary of Berkshire, and the performance of its stock portfolio has been buried in the parent’s financial statements. But we’ve gleaned what’s in Simpson’s post-1996 portfolio from Geico’s reports to insurance regulators, as abstracted by A.M. Best, the insurance analyst and ratings firm. Using that data we estimate that Simpson earned 17% last year, while Buffett barely broke even.

Bigger question: Is value the place to be? For most of the past five years, no. Investors who owned high-multiple technology stocks like Yahoo and Cisco whizzed by investors who owned plodding value stocks. But lately value investing has come back into its own. The tech-rich Nasdaq collapsed in the spring and has not recovered. A Simpson favorite, Freddie Mac, in contrast, has done well in the past six months, up 20%.

The differences between Buffett and Simpson are not large, but they’re instructive.

First, there’s turnover. While both men turn their portfolios far more slowly than the average fund manager, Buffett holds on to his core holdings pretty much forever. He has had Coca-Cola and Gillette for more than a decade, even though both have had their runs of bad luck–a big reason his performance has suffered of late. Last year he did buy some new stocks, but they represented just 5% of Berkshire’s portfolio.

Simpson, on the other hand, added two new core positions last year, representing a quarter of his portfolio–clothier Jones Apparel and cable TV operator Shaw Communications (see table). And he jettisoned longtime holding Manpower, the temporary-employment outfit. In the first half of this year he picked up railcar leasing concern GATX and financial rater Dun & Bradstreet.

Also, Simpson is quicker to unload a recent purchase. Consider Arrow Electronics and Mattel, both of which he bought in 1997 and dumped the following year, and TCA Cable, which he purchased in 1998 and sold last year.

Buffett shuns technology (“We will never buy anything we don’t understand,” he has famously said), preferring more traditional, if stodgier, areas. Simpson buys tech companies, albeit not the hot ones favored by momentum investors. He would rather own Arrow, a distributor of electronic components and computer products, trading at less than the market multiple when he held it. Or Shaw Communications, which doesn’t have much in the way of net income, but, like a lot of cable companies, has a pretty healthy operating income (net before amortization, interest and taxes), and also holds nice stakes in Internet, direct-to-home satellite and telecom companies.

Berkshire has half of its portfolio in the beaten-up financials sector. Simpson is interested in that arena, but less so than Buffett. He has a quarter of Geico’s portfolio in two names: Freddie Mac and U.S. Bancorp.

Another difference: Simpson runs a very concentrated portfolio. Geico owned just nine stocks at last count, while Berkshire had 28. The average large-cap value mutual fund holds 86.

Just who is Louis Simpson, anyway? The folksy Buffett is much more outgoing, a pal of celebrities like Bill Gates and a real ham at Berkshire’s annual meetings in Omaha. He occasionally talks to the press. Simpson seems shy, and doesn’t give interviews. Even his paycheck is low-profile: When Berkshire bought out Geico in 1996, Simpson was hauling in an annual salary of just $600,000.

That said, Simpson and Buffett have much in common. For fun, they pore over annual reports and the accompanying tiny-type footnotes to financial statements, scrapping for every morsel of unrealized value.

Like Buffett, Simpson lives outside the nation’s media centers. While Geico is based in Washington, D.C., Simpson and his wife, Margaret Rowley Simpson, reside in Rancho Santa Fe, Calif., near San Diego. They have three grown sons.

A native Chicagoan, Simpson taught economics at Princeton in the early 1960s and ended up in 1969 at Shareholders Management–a flashy, trading-oriented mutual fund shop headed by Fred Carr, who later ran junk-bond-heavy First Executive into the ground. Within a half-year of Simpson’s arrival Shareholders hit trouble when the market dropped, and he bolted. The bad experience convinced Simpson that high turnover and risky growth stocks weren’t for him. A decade later Simpson landed at Geico after a four-hour interview with Buffett, who reportedly said, “Stop the search. That’s the fella.”

In the end, then, what can investors glean from that “fella”?

For one, a value investor need not shun a company just because it has a high multiple and is into technology. Shaw Communications, for example, trades at more than double the market, but Simpson believes it is a good company–even at 61 times earnings. Two, buy-and-hold doesn’t mean hold forever, as seems to be the case with Buffett. And three, you don’t need 100 stocks in your portfolio. Less than 10 carefully chosen companies seems to suit Louis Simpson just fine.